Retail Sales,New Orders Soar. Metcalfe’s Law And Crypto. Demographics And Growth. Sound Money Return? Inflation Allocation.

November 19, 2021

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1. Retails sales explode alongside Inflation. Philly Fed new orders hit a 20 year high. Quad 2 reflation confirming in Q4 2021.

Total retail sales jumped by 1.7% in October from September, by 16.3% from October a year ago, and by 22% from October 2019. Savings took off through the last 2 years so there is still significant spending power in bank deposits.

https://wolfstreet.com/2021/11/16/massive-price-increases-overstimulated-demand-fuel-historic-surge-in-retail-sales/

https://twitter.com/KeithMcCullough/status/1461638510054625284

2. Metcalfe’s Law and Cryptos. Don’t miss this wide ranging pro to pro discussion between Raoul Paul and Keith McCullough. What works in crypto is the network effect, but volatility is a major challenge so  process is key to long term success. Don’t miss this great conversation.

https://www.youtube.com/watch?v=ziRGKSo7Mjk

3. Demographics and growth. Demographics are highly predictable and have a huge impact on growth. It has been a major factor in inducing massive policy activism in the last 2 decades. Demographic growth constraints may once again be a factor in 2022.

“The fuel for economic growth, particularly in a nation running gargantuan trade and budget deficits, is population growth. Not any population growth, but working age population growth. It is the growth of this cohort that drives potential employment growth, potential consumer growth, potential homeownership growth. Absent that growth, the means to continue “growing” is to substitute cheaper debt, more debt, more stimulus, etc. and claim those substitute as real growth.”

https://econimica.blogspot.com/2021/11/next-economic-financial-crisis-begins.html

4. Return to sound money. The Austrian empire experienced a significant hyperinflation around a century ago. It is insightful to reconstruct this experience for current times.

“With the threat of dollar hyperinflation now becoming a reality it is time to consider what will be required to stabilise the currency, and by extension the other fiat currencies which regard the dollar as their reserve.”

https://www.goldmoney.com/research/goldmoney-insights/returning-to-sound-money

5. Best Investor Howard Marks rethinks his inflation outlook. Most likely the inflation background has experienced a secular change. Last week the western central banks took little to no action in the face of excessive inflation readings, rising growth, and the most aggressive policy settings seen for decades. Howard Marks has written a great memo on inflation with his customary rigor and clarity.

https://www.oaktreecapital.com/insights/howard-marks-memos

 

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